Reselling Digital Music Runs into Legal Hurdles

When I was in high school I experienced a tragedy in my life of epic proportions that I labeled “The Great CD Loss of ’99.” All that actually happened was that I left a case with nearly every CD I owned on a bus after a trip, but of course those are the kinds of things that can be considered epic during those formative years.

I began slowly reacquiring many of those albums in the subsequent months, but did so primarily out of the used bin at the local Hastings – money was another tragedy in those days, so buying new wasn’t really an option no matter how much I wanted to support those artists. It also allowed me the chance to revaluate my musical taste when deciding which records I liked enough buy again (yes, No Doubt had a record before Tragic Kingdom; no, it was not good).

Before I get too bogged down in digressions, let me get to the point that is this plan of action I had would be essentially impossible these days, and not just because no one carries around a case with 96 CDs in it (or any CDs at all).

I guess today’s equivalent of the “Great CD Loss” for most would be a bum hard drive (always back up your files!), and a U.S. District Court has just ruled that it is illegal for any company to sell “used” copies of digital songs.

The specific case involved Capitol Records and a “used” service called ReDigi. Essentially, the latter company sold pre-owned digital music at a discount, similar to the aforementioned Hastings used bin. The company also claimed to delete the digital file from the seller’s computer.

But the court said that the “first sale doctrine” of U.S. copyright law (which allows the sale of used CDs and DVDs) does not apply to the digital sphere.

The case was a big win for labels, who get no money from re-sales, whether they are digital or physical copies. More importantly, it represents yet another precedent as the courts continue to define digital copyright seemingly on the fly.

In my opinion, it also continues the trend of the major labels stubbornly standing behind a music business model that is quickly becoming outdated with little to no eye toward the future of the business, which is obviously based in the digital sphere.

That’s not to say that the court’s ruling was wrong or bad for the music industry in general – after all, the effectiveness (and legality) of the “first sale doctrine” has been debated for decades. I just can’t see why the major labels are stomping out the new technology models they feel do not suit them without actively offering their own new digital alternatives.

Additionally, Billboard reports that both Apple and Amazon have recently filed patents for digital rights technologies that would essentially treat digital copies of songs and movies as loans and rent them to consumers. I would assume that the labels would be more concerned about these big players in the industry that have the resources and brand recognition to spur major changes to the landscape of the music business.

Or maybe the labels already have forgotten about how Apple basically changed the way we listen to music with one fell swoop when it introduced the iTunes store just a few years after my great CD tragedy. The changes in the industry that followed have essentially been slowly driving the nail into the proverbial coffin of CD sales ever since. When no one is selling CDs at all, it doesn’t matter if old sales were new or used.

The labels might want to pay as much attention to this precedent as they do the court’s new ruling.